Tag: Pradhan Mantri Jan Dhan Yojana

Despite the frenzy of distractions since, by now you have likely heard the news that demonetisation failed. As NDTV’s Sreenivasan Jain put it in Truth vs Hype, the news sent the government into “a spiral of deflection, of moving goalposts and of swamping us with cherry-picked data”. He’s being very polite, avoiding the accurate and efficient word: “lies”.

Take this blatant example from the 31 Aug 2017 Ministry of Finance release titled “Demonetisation immensely beneficial to Indian Economy and People”:

The Government had expected all the SBNs to come back to the Banking system to become effectively usable currency.

Oh yeah? Here are four examples that show otherwise:

In his 8 Nov speech, Prime Minister Narendra Modi stated: “The 500 and 1,000 rupee notes hoarded by anti-national and anti-social elements will become just worthless pieces of paper.”

Two days later, Finance Minister Arun Jaitley told News18 that, of the 14 lakh crore notes outstanding, “some would certainly get extinguished” because “people who have used cash for crime purposes are not foolhardy enough to try and risk and bring the cash back into the system”.

On 10 Dec, Attorney General Mukul Rohtagi informed the Supreme Court that “the government had expected ₹10 or 11 lakh crore to be returned out of a total of ₹15 lakh crore of ₹500 and ₹1,000 notes that were demonetised”.

One month later, on 10 Jan, NITI Aayog member Bibek Debroy predicted that some 10% of the notes in circulation would not return.

Some other big holes in the government’s defence of demonetisation are now widely acknowledged. That the proportion of fake notes in the system is small and remains so, and that the cash crunch failed to impede the activities of militants in Kashmir and in Naxalite areas (here, here and here). That demonetisation has brought in fewer taxpayers than the government claims.

So what’s left to be said?

Quite a bit, it turns out. The big fibs are defended by a ring of smaller lies and half-truths, to the point that honesty seems absent in the entire defence of demonetisation. It’s one thing for politicians to spin or massage the truth, quite another for an official government statement to do so.

Let’s look at the claims in that document, one by one.

A significant portion of SBNs deposited could possibly be representing unexplained/black money… Since November 2016 and until the end of May 2017, a total of Rs 17,526 crore has been found as undisclosed income and Rs 1003 Crore has been seized.

Duh, that’s obviously what happened. It is possible that the income tax department’s Operation Clean Money exposes a good proportion of that money in the coming months, and thereby contributes to the original goals of demonetisation. But the evidence so far is unimpressive.

₹17,256 crore sounds like a lot, but is actually well within historical averages, even if we exclude the unusually large 2013-14 haul – which we really shouldn’t since demonetisation was supposed to be this bold, never-seen-before move (see chart below). The best-case scenario is that future revelations await, the worst-case scenario is that wily citizens successfully convert black money to white.

Takeaway: Wake us up when you have something solid.

The total assets under management (AUM) of Mutual funds (MFs) rose by 54% by the end of June 2017 from March 2016.

This is simply ridiculous as a defence of demonetisation. The bulk of this asset growth happened prior to demonetisation, between Apr and Oct 2016, when it rose 32% (according Association of Mutual Funds in India data). Following demonetisation, mutual funds assets grew a more subdued 16% between Nov 2016 and Jun 2017. But 54% sounds so much cooler than 16%, doesn’t it?

Takeaway: They do take us for fools.

Thanks to demonetization led efforts, zero balance accounts under PMJDY declined from 76.81 % in September 2014 to 21.41% in August 2017.

More bunkum, I’m afraid. The proportion of zero balance Jan Dhan Yojana accounts had already fallen to 24.1% by 26 Sep 2016, several weeks prior to the demonetisation announcement. In fact, the reduction from 24.1% to 21.4% that occurred after demonetisation is the slowest since 2014 (see chart below), quite the opposite of what the Finance Ministry is implying.

Takeaway: Still taking us for fools.

As part of fillip to digitalization, about 52.4 crore unique Aadhaar numbers have been linked to 73.62 crore accounts in India. As a result, every month now, about 7 crore successful payments are made by the poor using their Aadhaar identification. The government now makes direct transfer of Rs. 74,000 crore to the financial accounts of 35 crore beneficiaries annually, at more than Rs. 6,000 crore per month.

Congratulations, but this has nothing to do with demonetisation. It’s to do with Aadhaar and PMJDY, which were ticking along nicely long before demonetisation, and would have continued to do that in its absence.

Takeaway: Irrelevant.

Digital payments have increased by 56% from 71.27 crore transactions in October 2016 to 111.45 crore transaction till the end of May, 2017.

This implies steady growth in digital transactions, when in fact the Ministry of Electronics and Information Technology – clearly more honest than the Finance Ministry – admitted in the Lok Sabha on 2 Aug that “digital transactions increased during November-December 2016 and have plateaued thereafter”. In other words, people shifted to digital payments when they had no cash, got accustomed to it to some extent, and then reverted to their old habits. This is clear in the chart below — and recent National Payments Corporation of India data show no increase in later months either.

So we sacrificed millions of jobs and two percentage points of economic growth for a temporary bump in the growth rate of digital payments.

Takeaway: If only the spin would also plateau.

Some people had expected a very large shock to economic growth on account of demonetisation. Their expectations have been belied.

I don’t know what the Finance Ministry is smoking, but it’s obviously potent stuff (see below). To be fair, the 5.7% GDP number came out the day after the demonetisation defence, but the 6.1% growth in Q4/2016-17 was already down 1.8 percentage points from 7.9% in Q4/2015-16. The only expectations belied here are the Finance Ministry’s.

It’s not easy to defend a failing flagship policy, especially when the central premise is shaky. When the foundation is built on wishful thinking, the supporting ‘evidence’ is bound to stray into fictional realms too. Let’s hope the Finance Ministry doesn’t have to rely on such storytelling skills in the future.

In case you’re wondering where Prime Minister Narendra Modi’s promised “Acche Din” went, the answer is getting clearer. As part of the Uttar Pradesh campaign,BJP-affiliated social media has been spreading clips of a 16 Sep TV appearanceby party president Amit Shah, where he directly answers this question.

So let’s examine the six claims that Shah, the most influential BJP leader after Modi, made to show how much better our lives are now.

A poor mother burning a wood-fired stove had to inhale the equivalent of 400 cigarettes a day. Now she gets cooking gas from the Ujjwal Yojana, that’s called Acche Din.

Shah seems to have a point here. The Rs 8,000 crore Pradhan Mantri Ujjwal Yojana (PMUY) – that offers “below poverty line” (BPL) households a subsidy to offset the cost of getting a liquefied petroleum gas (LPG) connection – had a strong start since May 2016. In merely nine months, 1.7 crore BPL housholds have received LPG connections, of a target of 5 crore by 2019. The annual growth in LPG connections has ticked up from an average 10-11% in recent years to 15% in the current fiscal year.

But, as the cliche goes, Rome wasn’t built in a day. In response to studies that found that urban and middle-class Indians gains disproportionately from LPG subsidies, in 2009 the UPA launched the Rajiv Gandhi Gramin LPG Vitaran Yojana (RGGLVY) to expand the network of rural LPG dealers. It also decided to subsidise the cost of an LPG connection to BPL households using the corporate social responsibility funds of India’s petroleum PSUs. These efforts bore fruit: the share of rural LPG distributorships rose from 14% in 2009-10 to more than 40% now, and some 70 lakh BPL households received LPG connections via RGGLVY. Around 17 state governments also had separate programmes to do the same, including Andhra Pradesh’s “Deepam” scheme that started in 1999.

The PMUY is essentially a supercharged version of RGGLVY, and the Modi government deserves full credit for stepping up the funding and delivery targets. The risk is what we saw with the Jan Dhan Yojana: such a target-driven push could produce a huge number of LPG connections that aren’t actually used. This isn’t hypothetical: government numbers show that 47% of households had LPG connections in 2011, but the census that year found that only 29% of households actually used LPG as their primary cooking fuel. Things have certainly improved in recent years, with the weeding out of duplicate accounts and so on, but it’s something to keep an eye on.

That said, the PMUY is a clear step forward from the past.

Verdict: Amit Shah scores on this point

All over north India, farmers used to had to demand their supply of urea, which was in short supply. For the last two years they have received all the urea that they asked for, that is called Acche Din.

Now that’s pretty cheeky. Urea is not a fertiliser generally in short supply in India, as long as imports occur in a timely manner and states lift their quotas. But the most vivid shortage in recent times occurred under the Modi government’s watch in late 2014, when delays in urea imports caused major shortages, sparking unrest and anxious questions in parliament. The 2014 general election did play a role: the outgoing UPA didn’t tender for imports in Apr-May 2014, and the new government’s Jun 2014 tender failed to attract bids. Urea imports in Jun-Oct 2014 fell to less than half of what they had been the previous year. By the time urea imports had picked up, farmers had already planted wheat, mustard and gram and were feeling the pinch.

So when Shah claims that Acche Din have returned for urea consumers, he’s really comparing today with the terrible first six months of the Modi government.

Verdict: Fail

For 68 years, 15,000 villages didn’t get electricity, that’s called Bure Din. When 9,700 of those villages get electricity, that’s called Acche Din.

Moving words indeed. It’s certainly true that the Modi government has stepped up the pace of rural electrification, seeking to connect the last 18,450 Indian villages without an electricity connection. But the NDA’s effort pales before what the UPA did between 2005 and 2014, when it electrified more than 1,07,600 villages.

This doesn’t take away from the Modi government’s achievement: many of the remaining villages are in remote locations and are harder to bring electricity to. But for Amitbhai to claim that electrifying 15,000-odd villages in three years heralds the arrival of Acche Din is just cute.

Verdict: Fail again

For the first time in 37 years, in the case of DAP and fertiliser, a ₹150-350 reduction in the price per bag is called Acche Din.

Libertarians will love this one (not). Since decontrol in April 2010, the prices of diammonium phosphate (DAP) and other non-nitrogen fertilisers have moved freely, with a fixed government subsidy given to producers to help keep retail prices down. A fall in global DAP prices would in any case have brought the domestic price down from ₹1,394 (per 50kg bag) in Apr 2016 to ₹1,216 in Jan 2017. But in late summer 2016 (as attested by a 5 Aug Rajya Sabha answer) the fertiliser industry caved in to government pressure (on unproven grounds of “undue profiteering”) and reduced the prices of DAP by ₹125/bag, muriate of potash by ₹250/bag and complex fertilizers by ₹50/bag. What is scandalous is that the government could have achieved the same outcome by increasing the subsidy by an equivalent amount, but chose instead to bully companies into lowering prices.

If coercing fertiliser companies to cut prices is your idea of good market practice, this one’s a winner. If not,

Verdict: Fail worse

To evaluate the quality of farmers’ land by giving them soil health cards, that’s called Acche Din.

A blatant fib, one that Modi himself has often himself repeated. Soil health cards have been in use since 2003, and the UPA issued 2.8 crore cards in its final three years, bringing the total in circulation to around 6.8 crore (source here). Modi relaunched the scheme on 19 Feb 2015, promising to issue 14 crore cards over the next three years, but progress has been slower than expected. Some 5.3 crore cards have been distributed in the scheme’s first two years.

The new scheme involves some compromises. Farms were earlier individually tested, but soil samples are now being taken from 10-hectare (in rain-fed areas) or 2.5-hectare (in irrigated areas) zones, effectively clubbing several farms together. This has speeded up the process of issuing soil health cards, but has made the results potentially less relevant to individual farmers.

To sum up, a good programme, but by no means can it be described as a new contribution.

Verdict: Another Fail

60 crore people are without bank accounts, of whom 15 crore people are given bank accounts, that’s called Acche Din.

This is Modi’s favourite scheme to hog credit for. There’s little doubt that the Jan Dhan Yojana has accelerated the spread of basic savings bank deposit accounts (BSBDA) to low-income populations, and increased the accounts’ usefulness by adding life and accident insurance. But the entire architecture of financial inclusion (BSBDAs, Aadhaar, electronic payments, RuPay cards) was created and implemented long before Modi took office.

In the two years before Modi, the UPA opened 4.4 and 6.1 crore BSBDAs respectively, which under Modi jumped to 14.7 crore in 2014-15, 6.7 crore in 2015-16 and 5 crore so far in 2016-17. Assuming conservatively that another government would have opened 6.1 crore BSBDAs per year (as the UPA did in 2013-14), the Modi effect looks something like this:

It turns out that more than 24 crore unbanked individuals were brought into the financial system before Amitbhai’s government took office. A good performance by the current government? No doubt. But an unprecedented break from so-called Bure Din? Nah.

Verdict: Jumla

It’s quite telling that five out of six instances of Acche Din cited by Amit Shah are misleading. It’s hard to live up to promises as inflated as the BJP’s 2014 claims, both about the UPA’s dark ages and their own development genius. But clearly, playing fast and loose with facts to a willing audience has not hurt either Modi or Shah. Maybe that’s what they mean by Acche Din.

Prime Minister Narendra Modi spoke to Times Now, his first TV interview since taking office, on 27 Jun 2016. As with his Wall Street Journal interview the month before (critiqued here), Modi covered a lot of ground, from economic reform to domestic politics to foreign policy. Here we specifically examine some of his claims regarding his ambitious development agenda.

Modi has developed a flair for presenting evolutionary policy steps built on his predecessors’ work as revolutionary and original contributions to national development. Take his repeated claim regarding the Pradhan Mantri Jan Dhan Yojana (PMJDY):

It’s not in words but in actual achievement. I had said that within a given timeframe, we will open bank accounts for the poor. For something that had not been done for 60 years, setting a timeframe for it was in itself a risk.

The Pradhan Mantri Jan Dhan Yojna is not only about opening bank accounts for the poor. Because of this the poor are feeling that they are becoming a part of the country’s economic system. The bank that he was seeing from afar, now he is able to enter that bank. This brings about a psychological transformation.

Very moving, but it’s a bit much for Modi to hog the credit. It is true that the PMJDY has accelerated the spread of basic savings bank deposit accounts (BSBDA), and increased their usefulness by adding life and accident insurance. But the entire architecture of financial inclusion (BSBDAs, Aadhaar, electronic payments, RuPay cards) was created and implemented long before Modi took office.

In the two years before Modi, the UPA opened 44 and 61 million BSBDAs respectively, which under Modi jumped to 147 million in 2014-15 and 67 million in 2015-16 (see table below). Assuming conservatively that another government would have opened 61 million BSBDAs per year (as the UPA did in 2013-14), the Modi effect looks something like this:

A solid step forward? Yes. But with 243 million bank accounts already in place before he was sworn in, the only thing we are seeing for the first time in 60 years is such a giant ego.

We have taken up construction of toilets. I had gone to Chhattisgarh and had the opportunity to get the blessings of one mother. An adivasi mother heard about the scheme for building toilets. She sold her four goats and built a toilet. That 90 old mother uses a walking stick and goes around the cluster of 30 or 40 houses in the tribal village and has been spreading the message to build toilets. This change is becoming the reason for the change in the quality of life.

Encouraging yes, but hardly novel. There is little doubt that open defecation is a public health hazard that contributes to the spread of diarrhoea, intestinal worm infections and other diseases that cause stunting, malnutrition and even death among young children. Which is why the government has for decades sought to furiously build toilets throughout rural India — with a discernible bump in Modi’s second year:

To be fair, Modi isn’t claiming exclusive credit here, and he is right to highlight the importance of behavioural change in his adivasi mother example. Open defecation in rural India has dropped much more slowly than in, say rural Bangladesh, partly because Bangladesh has targeted social norms in addition to building toilets. The UPA’s Nirmal Bharat Abhiyan (launched in 2012-13) and the current Swachh Bharat Abhiyan both recognised this reality, and Modi’s vocal advocacy could play an important role here.

That said, reports still suggest that behaviour change is lagging behind (here, here and here). The important point is that toilet construction is necessary but insufficient by itself to reduce open defecation.

You must have seen that the maximum electricity generation since Independence has occurred this year. The maximum amount of coal mined has been in this year. The maximum length of roads being constructed daily is happening in this year. The fastest loading and unloading of steamers at sea ports is happening now.

As previously explained in Modi’s autopilot achievements, there is always a good chance in a rapidly growing economy that every year will see one or the other record broken. Maximum electricity generation since independence? True for every year since 1975-76. Maximum coal mined? True for every year since 1980-81 (except 1998-99). Maximum length of roads being constructed? Probably true (but look here for context). Fastest loading and unloading of ships? True for every year since 2012-13. These claims work well on Twitter and Facebook, but are mostly meaningless in the Indian context.

After independence, for the first time, we have brought in Pradhan Mantri Fasal Beema Yojana which can cover maximum number of farmers. The farmer will have to pay only 2%, only 2%, the government will take care of the rest.

Yes, Mr Prime Minister, if we pretend that the following two never happened: the NDA’s 1999 National Agricultural Insurance Scheme (NAIS) and the UPA’s 2013 National Crop Insurance Scheme (NCIS — which clubbed the 2010 modified NAIS, the 2007 Weather Based Crop Insurance Scheme and the 2009 Coconut Palm Insurance Scheme). And the NCIS’ Hindi name has a familiar ring to it: the Rashtriya Fasal Bima Karyakram. The one time the UPA manages to instituted a programme without a Gandhi name attached to it, Modi replaces “national” with “prime minister”.

The new insurance scheme is certainly an evolution over its predecessors: premium rates are lower (with the government subsidy and contingent liabilities correspondingly higher), and harvested crops are now covered nationally (earlier this only applied to coastal regions). First time after independence? I don’t think so.

We have brought in Soil Health Card. We have a Soil Health Abhiyan. The farmer will know the fertility of the land through it. Whether a fertilizer needs to be used or not, the farmer will understand. On an average, a farmer with 1 hectare of land will be able to save Rs 15000-20000. So we have brought in scientific methods.

Another unfortunate exaggeration. Soil health cards have been in use since 2003, and even the UPA issued around 2.8 crore cards in its final three years, bringing the total in circulation to around 6.8 crore (source here). Modi relaunched the scheme on 19 Feb 2015, promising to issue 14 crore cards over the next three years, but progress has been slower than expected. The number of cards issued as on 28 Jun 2016 is 2.1 crore, short of the required pace albeit faster than what the UPA achieved.

But before you break out your gau-champagne, one reason is that farms were earlier being individually tested. Soil samples are now being taken from 10-hectare (in rain-fed areas) or 2.5-hectare (in irrigated areas) zones, which in effect clubs several farms together. This has speeded up the process of issuing soil health cards, but has made the results potentially less relevant to individual farmers.

Now like the initiative we have taken, we have started the Mudra Yojna. More than three crore people in the country comprise washermen, barbers, milkman, newspaper vendors, cart vendors. We have given them nearly 1.25 lakh crore rupees without any guarantee.

The Micro Units Development and Refinance Agency (MUDRA) Bank certainly sounds like a good idea. But there are literally dozens of financing schemes for micro-, small- and medium-sized entrepreneurs. The MUDRA Bank, currently a unit of the Small Industries Development Bank of India (SIDBI), appears to be a supercharged version of SIDBI’s Credit Guarantee Scheme that over about a decade until 2014 had given Rs 76,650 crore in guarantees to 1.6 million small entrepreneurs (as thisBusiness Standard article points out). And the wisdom of dishing credit out via “mega credit campaigns“, which used to be called “loan melas” in an earlier era, will only be known over time.

The bottomline: Mr Modi is overseeing a range of policy initiatives, many of which could well bear fruit. But as his good friend Barack once said: “You didn’t build that.”

Prime Minister Narendra Modi gave a wide-ranging interview to the Wall Street Journal to mark the second anniversary of his government. Modi argued that he had restored confidence to India and put an end to the “sense of policy paralysis, bad economic conditions and corruption” of 2012 and 2013.

As usual, there was a grain of truth, and also the exaggeration and sleight-of-hand that we have come to expect from him (look here for a check of other claims by Modi).

Consider Modi’s highlighting of the Pradhan Mantri Jan Dhan Yojana (PMJDY) as an instance of how his leadership had ended “a sense of negativity and a sense of deep inertia in the government machinery”:

If you see my Jan Dhan Yojana, you’ll find that I mobilized the whole government machinery so that in a definite period of time, the country’s poorest could be linked to the mainstream of the economy, its banking system.

Certainly, the PMJDY has accelerated the spread of basic savings bank deposit accounts (BSBDA), and increased their usefulness by adding overdraft facilities and life and accident insurance. But the truth is that the entire architecture of financial inclusion (BSBDAs, Aadhaar, electronic payments, RuPay cards) was created and implemented long before Modi took office. Modi often talks as if he singlehandedly brought the poor into the financial system, but the facts show that India’s financial inclusion programme was already established and growing rapidly.

In the two years before Modi, the UPA opened 44 and 61 million BSBDAs respectively, which under Modi jumped to 147 million in 2014-15 and 67 million in 2015-16 (see table below). If we conservatively assume that another government would have opened 61 million BSBDAs per year (as the UPA did in 2013-14), then the Modi effect looks something like this:

Modi’s mobilisation of government machinery did have a positive effect: we can quantify it at around 92 million accounts, or 20% of the 457 million accounts opened (as on 30 March 2016). Impressive, yes, but the “policy paralysed” UPA also brought millions of poor households into the financial system. Indeed, there was a downside to Modi’s big 2014-15 push: the number of accounts with zero balance was 45% one year after PMJDY began, although it had declined to 26% by 26 May 2016. The growth in account openings consequently slowed in 2015-16.

If Modi did end “negativity” and “inertia” in the government, the PMJDY is definitely the wrong story to pick.

Modi went on to say:

My country had lost a lot of face on account of corruption relating to the coal scam, the scam involving auctions of the 2G network. But within a short and fixed time period, we have ensured transparency. Auctions are now actually held openly and online in front of media.

There is little doubt that the coal and 2G controversies damaged the UPA and helped Modi’s election victory. Indeed, the Modi government has overseen a spate of auctions to allocate natural resources since he took office. But this is not new: the UPA auctioned 3G and 4G spectrum in 2010, and 2G spectrum in 2012 after the Supreme Court cancelled the flawed January 2008 allocations in February 2012.

Likewise, the Modi government had to auction coal blocks after the Supreme Court (in September 2014) cancelled the allotment of 214 coal blocks made between 1993 and 2011. The Modi government could be commended for its speed, but it didn’t have any choice in the matter either.

In defence of his economic policymaking record, Modi also stated the following:

In India, reform in the insurance sector, reform in the defense sector, reform in the Bankruptcy Code had been pending for years… In defense, in my country, there was no private investment. Today I have allowed it to 100%. In insurance, private investment was not allowed. I have allowed it… I have allowed 100% foreign direct investment in the railways.

Now it’s entirely true that the Modi government succeeded in doing what the UPA had failed do for many years: to raise the FDI cap in insurance from 26% to 49%. It also passed a comprehensive Insolvency and Bankruptcy Code this year that should help clean up Indian banks’ balance sheets. And FDI is now permitted in railway infrastructure (though not in rail operations) whereas previously it was allowed only in metro rail.

But the claim regarding defence FDI is simply wrong. Consider the UPA’s July 2013 policy on FDI in defence:

Here’s the Modi government’s current policy:

The new policy is certainly more liberal than the older one, but it is misleading for Modi to say “today I have allowed it to 100%”. Just as it does today, the government had the power in July 2013 to approve defence investments with 100% FDI if it had wanted.

And the reality? No 100% FDI proposals have so far been approved. Here’s what Defence Minister Manohar Parrikar told parliament in April 2016: “From August 2014 to February 2016, a total amount of Rs.112.35 lakh (Rs 1.12 crore) has come into the country as FDI in the defence sector”. Damp squib.

Finally, Modi stated that:

If you look at the entire post-independence phase of the country, you will find that in terms of money volumes the maximum disinvestment has taken place in the last two years.

An odd formulation, considering that disinvestment began in 1991-92, but Modi is, at first cut, correct. The Rs 48,234 crore raised through disinvestment in 2014-16 is somewhat higher than the Rs 45,697 raised by the UPA in 2009-11.

But that’s too simple: if you’re comparing long periods like “the entire post-independence phase of the country”, you need to account for inflation: the value of a rupee raised in 2004-05 is not the same as in 2014-15. A proper comparison requires us to deflate the value raised from disinvestment with an appropriate, consistent index, in this case the Wholesale Price Index (base 2004-05).

We find that the volume of disinvestment by the Modi government (in constant 2004-05 rupees) at Rs 26,671 crore is dwarfed by the Rs 33,464 crore the UPA2 raised in its first two years. Even in 2012-13, under the “policy-paralysed” UPA, the value of equity divested was greater than in either of the Modi government’s two years in office.

But the cold reality is that disinvestment has been an embarrassment under both the Singh and Modi governments, and basically reduced to a fiscal deficit padding sham in which a third to a half of funds have come from the state-owned Life Insurance Corporation. The following chart (sources here, here and here) says it all:

It could be that the NITI Aayog or the Bank Board Bureau proposes a genuine transformation of the public sector in the coming months. But until that happens, Modi would be well advised to avoid flaunting what is a policy embarrassment from every perspective.

That’s not, how should I put it, consistent with the facts. Take a look a the chart below that shows how many “Basic Savings Bank Deposit Accounts” (BSBDA) were opened over the past six years. In the two years before Modi, the annual increase in the number of BSBDAs was 44 and 61 million, which jumped to 147 million in 2014-15 (for simplicity let’s give Modi credit for all accounts opened that year, including the month-and-a-half prior to his taking office in mid-May).

Now 147 million is an impressive number, even in comparison with the previous year’s 61 million. But to understand what Modi is bringing to the table in terms of vision and acumen, you need to estimate how much better he is doing than his predecessor would have. A linear extrapolation from the previous trend gives you around 90 million new accounts in 2014-15 under a third United Progressive Alliance (UPA) government. But let’s be strict and assume that the UPA would have added the same number of accounts as it did the previous year. Under that assumption, the Modi effect is a net addition of 86 million accounts.

That’s still a solid number, leaving aside criticisms that more than half of all Jan Dhan Yojana (JDY) accounts are dormant, and that there has so far been minimal utilisation of the admittedly useful features (overdraft facility, life insurance, accident insurance) that JDY brings to the table. But raising the tally by a fifth does not even come close to single-handedly bringing financial inclusion to India’s poor.